JPMorgan expects Fed to raise rates in 2027

Summary

On January 12, JPMorgan reversed its forecast for the U.S. Federal Reserve, no longer expecting a rate cut in 2026 and now predicting a 25 basis point rate hike in the third quarter of 2027.AnueSec This change followed a recent jobs report and marks a significant shift from their previous expectation of a 25 basis point cut in January 2026.

Impact Analysis

So JPM just completely flipped their Fed call. They’re not just pushing out the timing of cuts anymore; they’re now calling for the next move to be a hike in Q3 2027.AnueSec This is a huge shift from their call just a few weeks ago for a cut in early 2026.HongKong Economic Journal The trigger was clearly the latest jobs data, which has them thinking the economy is too strong for the Fed to even consider easing. This is the most hawkish call on the street right now and it challenges the entire ‘rate cuts are inevitable’ narrative that’s been propping up risk assets.

They’re basically saying the ‘higher for longer’ theme is understated. This isn’t a temporary pause; it’s a new regime. This is very bearish for long-duration assets. I’d be looking to reduce exposure to rate-sensitive growth stocks and maybe even shorting long-term treasuries. This is a signal that the inflation fight isn’t over.